RAJIV SHAKDHER, J.: (ORAL)
CM APPL. 35162/2022
1. Allowed, subject to just exceptions.
CO.APP. 5/2022 and CM APPL. 35163/2022[Application filed on behalf of the appellant seeking condonation of delay in filing the appeal]
2. This appeal is directed against the order dated 29.04.2022, passed by the learned Company Judge.
3. Via the said order, the learned Company Judge has directed the refund of Rs. 37,28,440/- which was deposited by the appellant with the Registry of this Court.
4. Admittedly, the said amount was deposited by the appellant, pursuant to his plea made before the Learned Single Judge, that the appellant was interested in reviving the company in issue i.e., Bharat Foam Udyog Pvt. Ltd. i.e., the company-in-liquidation.
4.1 For this purpose, an application was moved by the appellant, which was numbered as CA No. 4480/2016.
5. The impugned order i.e., order dated 29.04.2022 has been passed in CA No. 273/2022.
5.1 The appellant is aggrieved by the fact, that the learned Company Judge has granted him partial relief i.e., directed only the refund of the aforementioned amount, without directing payment of interest, which evidently, has accrued on the said amount.
6. Mr Pradeep Aggarwal, who appears on behalf of the appellant, says that the said amount was deposited, pursuant to the order dated 20.02.2017 passed by this Court.
7. It is Mr Aggarwal’s submission, that at every stage, the appellant was impeded by the Official Liquidator [“OL”] in obtaining the necessary information, which would have enabled the appellant to place a scheme of revival, before the company Court.
8. Ms Ruchi Sindhwani, who appears on behalf of the OL, on the other hand, says that the appellant was both a shareholder and a director in the company-in-liquidation.
8.1 It is Ms Sindhwani’s submission, that according to the appellant’s own submission, he resigned as the director of the company-in-liquidation (i.e., before its liquidation) on 05.10.2015.
8.2 Ms Sindhwani also points out, that the winding up petition against the company-in-liquidation was admitted on 31.08.2016.
8.3 According to Ms Sindhwani, the appellant cannot contend that he did not have the relevant information. In fact, Ms Sindhwani refers to Section 454 of the Companies Act, 1956 [in short, “ the”]. It is Ms Sindhwani’s contention, that the ex-directors are obliged to file statement of affairs in terms of the said provision.
8.4 Furthermore, it is the contention of Ms Sindhwani, that the valuation, of the assets made by the OL, is placed public realm, and therefore, the appellant cannot say that he did not have the necessary information.
8.5 It is further submitted by Ms Sindhwani, that the averments made in CA No. 4480/2016 would clearly demonstrate, that the motivation for having the winding up proceedings stayed was triggered by the fact, that a closely held private limited company i.e., Faridabad Metal Udyog Ltd. [“FMUL”] was occupying a portion of the land, which was owned by the company-in- liquidation.
9. Mr Aggarwal, at this stage, intercedes and says that the aforementioned company i.e., FMUL was a lesseee of the company-in- liquidation.
10. Mr Aggarwal has also drawn our attention to the order dated 31.01.2018, passed in CA No. 1244/2017, whereby one of us [Rajiv Shakdher, J.] sitting as the Company Judge, had via the aforesaid order directed the OL to grant access to the appellant, as regards the records of the company-in-liquidation.
10.1 Mr Aggarwal says, that despite this order, no access was granted.
11. On being queried, as to why an appropriate application was not moved to have the order enforced, Mr Aggarwal did not have a satisfactory response to the said query.
12. We have heard the learned counsel for the parties, and examined the matter.
13. According to us, the Learned Single Judge has declined the prayer to grant interest, as the appellant had failed to file a scheme for revival concerning the company-in-liquidation. This was sought to be countered by Mr Aggarwal, by referring to the aforementioned aspect, which is, that the appellant did not have access to the relevant information.
14. The record shows, and Mr Aggarwal concedes this fact, that insofar as the company-in-liquidation is concerned, it was, at the relevant juncture, a closely held company.
15. The appellant held, on his own showing, 2.93% of the equity in the company-in-liquidation, and along with his family members, held nearly 24.4% of the equity.
16. As indicated above, in October 2015 the appellant was acting as the director of the said company. The application for filing a scheme was moved in and about 03.11.2016.
17. Therefore, according to us, there could not have been much variation in the position of the assets, since the winding up petition was filed in and about August 2016 under Section 433 of theand accordingly, the petition was admitted on 31.08.2016.
18. As a matter of fact, a perusal of the said order shows, that the Company Court appointed the OL as the provisional liquidator, and directed the directors of the company-in-liquidation to file the statement of affairs, within twenty-one days from the said date.
19. Therefore, the onus, as regards the affairs of the company-in-liquidation, at that point in time, was put on the appellant. The appellant, clearly, tarried and did not show enough alacrity to file a revival scheme.
19.1 This state of affairs continued to operate, even after the appellant had obtained an order dated 31.01.2018, whereby the OL was directed to grant the appellant, access to the records of the company-in-liquidation.
20. Insofar as the interest is concerned, it is payable if there is statutory enactment i.e., substantive law to that effect, or if trade, usage, custom or practice, which is enforceable in law mandates the grant of interest, or there is an agreement to that effect. Interest can also be paid by the Court, while exercising equitable jurisdiction. However, in order to invoke the rule of equity, it would be necessary for the claimant, in the first instance, to establish the existence of circumstances, which would attract such equitable jurisdiction (See: Bengal Nagpur Railway Company vs. Ruttanji Ramji &Ors. AIR 1938 PC 67 [LQ/PC/1937/129] ; Union of India (UOI) vs. Watkins Mayor and Co. AIR 1966 SC 275 [LQ/SC/1965/378] ). Thus, interest by way of compensation is, ordinarily, not awarded for wrongful detention of debt, in the absence of the aforementioned facets.
20.1 However, interest can also be awarded by way of damages, if there is breach of contract. Therefore, in a suit for compensation, the plaintiff will be entitled to make such claim, which would include interest vis-a-vis the loss suffered on account of the breach of contract committed by the defendant (See: Official Receiver, Calcutta High Court and Anr. vs Baneshwar Prasad &Anr. AIR 1962 Pat 155) [LQ/PatHC/1961/90] .
20.2 In this case, clearly, the amount deposited by the appellant was not a debt owed to him. Therefore, no case for payment of interest, in our view, was made out having regard to the parameters indicated above.
20.3 As adverted to hereinabove, even in equity, the appellant in this case would not be entitled to interest, as he failed to present a scheme before the learned company judge, with the result that the liquidation proceedings of the company were considerably delayed. In any event, there was no bar in the appellant approaching the Court at an earlier date for refund of the money deposited by him. Therefore, it cannot even be said that the appellant was deprived of the use of money (See: Secretary, Irrigation Department, Government of Orissa and Ors. vs. G.C. Roy and Ors. (1992) 1 SCC 508) [LQ/SC/1991/700] , and thus should be compensated by way of interest. Thus, even on equitable grounds (which we suspect is the ground that is sought to be propounded by Mr Agarwal, although the submission made before us is not articulated in those very words) no interest can be granted to the appellant, as he contributed to the delay in having the aforesaid company liquidated.
21. Clearly, the record seems to suggest that the appellant did not show enough keenness in taking the matter forward concerning submission of the revival scheme.
22. As alluded to above, the reason articulated before us, that complete information was not available for filing a scheme, appears to be a ruse for explaining the lack of alacrity and keenness.
23. Thus, having regard to the overall facts and circumstances, we are not inclined to interfere with the discretion employed by the Learned Single Judge in declining the prayer for grant of interest.
24. The appeal is, accordingly, dismissed.
25. Consequently, pending applications shall also stand closed.
